Thu, Nov 02, 2017 - Page 10 News List

Apple drops Qualcomm chips: source

CORPORATE FEUD:The company reportedly decided not to use the San Diego firm’s chips in its new lines because of a long-running dispute over propriertary technology

Bloomberg

Apple Inc is designing iPhones and iPads for next year that do not use components from Qualcomm Inc amid an escalating dispute between the companies, according to a person familiar with the matter.

The product plans are in the early stages and might still change, said the person, who asked not to be identified because the matter is private, adding that Apple might use modem chips from Intel Corp and MediaTek Inc instead.

Apple made the decision amid a dispute over the iPhone maker’s access to the San Diego-based company’s proprietary technology, people familiar with the matter said.

Qualcomm shares on Tuesday fell as much as 8.1 percent, the biggest intraday drop since January, to US$50.25 in New York trading. Apple shares were up 1.2 percent to US$168.78.

Apple chip orders for the iPhone add as much as US$1.75 billion a year for Qualcomm, according to an estimate by Raymond James & Associates.

If that business went away it would represent about a 7.5 percent cut to the chipmaker’s annual sales, based on last year’s total revenue of US$23.5 billion.

“We believe a full exclusion from next year’s iPhone, while certainly possible, is not likely,” Chris Caso, an analyst at Raymond James, wrote in a note on Tuesday.

Caso believes Apple is unlikely to walk away from Qualcomm’s products completely because that would make it too reliant on untried technology from Intel.

Modems supplied by the two chipmakers are the key components in technology that allows smartphones to connect to cellular networks and access high-speed wireless data.

Qualcomm is the largest maker of such semiconductors.

It had been the exclusive supplier of the part until Apple began using Intel chips in some versions of the iPhone 7.

Qualcomm reports quarterly earnings and was due to give its outlook for the current quarter yesterday after the market closed.

Apple and Qualcomm have been fighting each other over patent licensing, with the iPhone maker accusing the chip designer of abusing its market dominance with high royalties. Qualcomm has fought back and is seeking to stop Apple from making and selling its smartphones in China.

An Apple representative said the company does not comment on future products.

Apple made the decision about next year’s products because Qualcomm withheld software needed to test chips in prototypes, the Wall Street Journal reported.

“The Qualcomm modem that could be used in the next generation iPhone has already been fully tested and released to Apple,” Qualcomm said in a statement to Bloomberg News. “We are committed to supporting Apple’s new devices consistent with our support of all others in the industry. Qualcomm’s wireless solutions remain the gold standard for premium tier smartphones.”

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